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      Unassociated Document

    August
      28, 2007

    VIA
      EDGAR

    Brian
      R.
      Cascio

    Accounting
      Branch Chief

    US
      Securities and Exchange Commission

    Division
      of Corporation Finance

    Mail
      Stop
      6010

    100
      F
      Street, N.E.

    Washington,
      D.C. 20549

            Re:
            Digital Power Corporation.
              Form
                10-K for fiscal year ended December 31, 2006

              Form
                10-Q for fiscal quarter March 31, 2007

              File
                No.: 1-12711

    Dear
      Mr.
      Cascio:

    This
      letter will set forth the Company's responses to the comments of the Staff
      of
      the Securities and Exchange Commission ("SEC") set forth in a letter to Jonathan
      Wax Chief
      Executive Officer of the Company,
      dated
      July 26, 2007 (the "Staff Comments") in connection with the above-referenced
      filing submissions.

        We
      have
      repeated your numbered comments below and have provided a response to each
      comment.

    Form
      10-KSB for the fiscal year ended December 31, 2006

    Management
      Discussion and Analysis, page 10

    Results
      of Operations, page 11

    1.
      SEC
      Comment: “We read in Note 12 that you have two product lines. In future filings
      please expand the discussion of revenues to also quantify and discuss reasons
      for changes in revenues by product line.”

    In
      response to the Staff comment, we supplementally advise the staff that we intend
      to revise our disclosure in future filings by expanding the discussion of
      revenues and quantify the revenues generated from the two product lines. In
      addition, we will clarify the reasons for changes in revenues by product line
      in
      the format we reported in form 10QSB for the period ended June 30, 2007 per
      below.

        “Total
      revenues for the Company decreased by 23.9% to $2,536,000 for the three months
      ended June 30, 2007, from $3,333,000 for the three months ended June 30, 2006.
      Revenue from the military products of the Company increased by 39.1% to $963,000
      for the three months ended June 30, 2007, from $692,000 for the three months
      ended June 30, 2006. Revenue from the commercial products of the Company
      decreased by 40.4% to $1,573,000 from $2,641,000 for the three months ended
      June
      30, 2006. The decrease in commercial product revenue is mainly attributed to
      end
      of life issues related to older standard product lines and timing issues while
      the increase in military product revenues is mainly attributed to new design
      wins.”

    Form
      10-Q for March 31, 2007

    Management’s
      Discussion and Analysis, page 16.

            2.

              SEC
                Comment: “In future filings please disclose reasons for material changes
                in revenues by segment and product
                line.”

    In
      response to the Staff comment, we supplementally advise the staff that we intend
      to review and revise our disclosure in future filings to disclose reasons for
      material changes in revenues by segment as we reported in form 10QSB for the
      period ended June 30, 2007 per below:

        “Revenues
      from the domestic operations of the Company decreased by 22.7% to $1,111,000
      for
      the three months ended June 30, 2007, from $1,438,000 for the three months
      ended
      June 30, 2006. Revenues from the Company’s European operations of DPL decreased
      24.8% to $1,425,000 for the three months ended June 30, 2007, from $1,895,000
      for the three months ended June 30, 2006. The decrease in the company’s European
      operations is mainly attributed to timing issues with existing and new
      customers. For the six months ended June 30, 2007, revenues for the Company
      decreased by 12.6% to $5,278,000 from $6,041,000 for the six months ended June
      30, 2006. The decrease in product revenue is mainly attributed to end of life
      issues related to older product lines and timing issues. Revenues attributed
      to
      the domestic operations of the Company decreased by 19.1% to $2,314,000 from
      $2,861,000 for the six months ended June 30, 2006. The decrease in product
      revenue is mainly attributed to end of life issues related to older product
      lines and timing issues. Revenues from the Company’s European operations of DPL
      decreased by 6.8% to $2,964,000 from $3,180,000 for the six months ended June
      30, 2006.”

    In
      addition, reasons for material changes in product line on consolidated basis
      will be disclosed as discussed in the response to comment number
      one.

            3.

              SEC
                Comment: “Under Financial Income, we read that financial income is mainly
                due to interest received from the exchange rate fluctuation. Please
                explain to us and clarify in future filings how exchange rate changes
                generate interest income. If you are referring to income or expense
                generated by foreign currency transactions, please
                clarify.”

    In
      response to the Staff comment, we advise the staff that the financial income
      is
      mainly due to interest income derived from our cash equivalents. In addition,
      Financial Income includes income/expense generated by foreign currency
      transactions entered into by our wholly owned subsidiary located in United
      Kingdom (DPL). We advise the staff that we will further clarify in future
      filings how financial income/expense is derived.

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            4.

              SEC
                Comment: “Under Liquidity and Capital Resources, in future filings please
                disclose reasons for material changes in cash flows provided or used
                by
                operations during the periods
                presented.”

    In
      response to the staff comment, we supplementally advise the staff that we intend
      to review and revise our disclosure in future filings to disclose reasons for
      material changes in cash flows provided or used by operations during the periods
      presented as we reported in form 10QSB for the period ended June 30,
      2007:

        “Cash
      used by
      operating activity was mainly due to decrease in accounts payable and related
      parties trade payables due to timing differences and net loss, offset partially
      by decrease in accounts receivable due to increased efforts on
      collection.”

        We
      acknowledge that the Company is responsible for the adequacy and accuracy of
      the
      disclosure in the filing. Staff comments or changes to disclosure in response
      to
      staff comments do not foreclose the Commission from taking any action with
      respect to the filing and the Company may not assert staff comments as a defense
      in any proceeding initiated by the Commission or any person under the federal
      securities laws of the United States.

        Should
      you
      have any further questions, please do not hesitate to contact me.

    Sincerely,

    Jonathan
      Wax

    Chief
      Executive Officer

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